Crop Insurance News

Estimated ARC Payments Are a Mixed Bag

Sep 08, 2015

The 2014 Farm Bill has produced major changes in farm program enrollment and acreage. For instance, 2014 base reallocation resulted in an increase of 12.8 million acres of corn base and 4.7 million of soybean base, while wheat base fell nearly 9.9 million acres.

Adoption of county-based Agriculture Risk Coverage (ARC-CO) is impressive. In 2014, 96 percent of soybean farms, 91 percent of corn farms and 66 percent of wheat farms chose ARC-CO, enrolling 76 percent of all base acres. More than 90 percent of long and medium grain rice and peanut farms chose Production Loss Coverage (PLC). The actual number of farms and acres in each program are shown below. (Farms elect ARC-CO and PLC on a commodity-by-commodity basis, so a single operation that chose ARC-CO for corn and PLC for wheat, for instance, would be counted in both Farms columns.)

ARC-County

PLC

ARC-County Base

PLC Base

Crop

Farms

(%)

Farms

(%)

Acres

(%)

Acres

(%)

Corn

1,238,481

(91)

121,968

(9)

90,057,276

(93)

6,388,066

(7)

Soybeans

1,017,775

(96)

42,295

(4)

52,635,553

(97)

1,688,265

(3)

Wheat

527,343

(66)

271,445

(34)

35,394,613

(56)

27,045,581

(42)

Yield updates, relevant only for PLC, resulted in yields about 30 percent higher than those used in the former counter-cyclical payment program.

Estimated Payments

The 2014 marketing year ended August 31, and the crop insurance team at Farm Credit Services of America (FCSAmerica) has calculated estimated payments under ARC-CO in Iowa, Nebraska and South Dakota, using national average cash prices of $3.70 for corn and $10 for soybeans, as projected by Kansas State University, and wheat’s final price of $5.99.

Corn producers in each of the states are likely to see the largest payments. In Nebraska, for example, the 50 highest estimated payments were for corn, especially irrigated corn. Some counties may receive more than $90 per acre on the qualifying 85 percent of base, according to Joe Beland, vice president of insurance at (FCSAmerica). Spread over the full base, that equates to $76.50.

Estimated payments for soybeans and wheat are lower, and farmers in a significant number of counties likely will receive no payments.